Dow rose 95, advancers over decliners about 5-4 & NAZ gave back 54. The MLP index went up 2+ to the 272s & the REIT index was even in the 344s. Junk bond funds inched higher & Treasuries advanced, taking the yield on the 10 year Treasury down to 2.93%. Oil gained 1+ to the 65s & gold remained steady at 1301.
AMJ (Alerian MLP index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.8009815247152391)
Warren Buffett & Jamie Dimon want companies to get away from a short-term approach to management & are therefore suggesting they ditch quarterly financial forecasts. But quarterly guidance, which only 28% of companies offered in 2016, is only part of the problem. Getting rid of quarterly guidance does not get rid of analysts creating benchmarks for a company to miss or make. It doesn't prevent share dips of a company when it announces that a new drug trial was not successful or it must close stores. A CEO's job is to brave that impact and the board's role is to give a CEO leeway. The best a company can do is to prepare the market for the reality. The ability to do so is particularly important in industries like food & retail, which are in the process of reshaping their portfolios and business models in the glare of the public eye. Those efforts are costly & not always predictable.
Forecasting quarterly earnings isn't the issue, it's CEOs
Pres Trump's meeting with Japanese president Shinzo Abe was billed as a conversation about upcoming peace talks with North Korea. But with steep tariffs on imports of Japanese steel & aluminum & threats of levies on Japanese cars, the topic of tense trade relations between the 2 countries was the elephant in the Oval Office. The meeting with Abe comes as Trump prepares for a gathering in Quebec tomorrow of the heads of state of the world's 7 largest economies, including Canada, the US, Japan, Britain, Italy, France & Germany. Officials from the EU also attend.
Abe faces pressure to join trade war against the U.S.
Fast-rising home prices may be a roadblock for buyers, but they are putting some homeowners on Easy Street. As home prices rise, so does the percentage of home equity for those owners with a mortgage. Home equity jumped 13.3% in Q1 compared from a year earlier, according to CoreLogic. For the average borrower, that translates to $16K in additional home equity gained during the year, or a collective $1T, the biggest gain in 4 years. Despite the big value gains in the past few years, 2.5M borrowers (4.7% of all homeowners with a mortgage) are still underwater on their home loans, meaning they owe more than the homes are currently worth. However, in Q1, 84K borrowers came up from underwater, regaining equity. The negative equity rate fell 21% from a year earlier, when just over 3M borrowers were underwater. Negative equity peaked in 2009 at 26% of all mortgaged properties. "Home-price growth has accelerated in recent months, helping to build home-equity wealth and lift underwater homeowners back into positive equity, the primary driver of home equity wealth creation," said Frank Nothaft, CoreLogic's chief economist. "The CoreLogic Home Price Index grew 6.7 percent during the year ending March 2018, the largest 12-month increase in four years." As with everything in real estate, the gains vary depending on location. Homeowners in Washington state, where prices are soaring, gained an average $44K in home equity, while Californians gained an average $51K. In the far Western states, equity gains are fueled by a long run in home price escalation. With strong economic growth & higher purchase demand, we expect these trends to continue for the foreseeable future," Nothaft added. Gains in home equity are likely fueling the boom in home remodeling. They are not, however, pushing homeowners to list their homes for sale, because trading up is so expensive and the supply of homes for sale is so lean. Those still in a negative equity position are also stuck in place because they would have to spend money to get out of their mortgages. They, too, are adding to the supply crisis. Ironically, homeowners gaining equity and homeowners with negative equity are part of the reason home prices are rising so quickly. Supply is so lean & demand is so strong that new listings are moving very quickly & the majority are selling above list price. Bidding wars are fast becoming the norm.
US homeowners gained $1 trillion in the last year as their housing values jumped
This was another mixed days for stocks, ahead of the big G-7 meeting at which very little is expected to be decided. There was profit taking in the big tech stocks. Given their recent run, selling was in order. Meanwhile the Dow is hanging in above 25K, something the bulls like to see. Unsettled conditions for trade negotiations will continue.
AMJ (Alerian MLP index tracking fund)
Warren Buffett & Jamie Dimon want companies to get away from a short-term approach to management & are therefore suggesting they ditch quarterly financial forecasts. But quarterly guidance, which only 28% of companies offered in 2016, is only part of the problem. Getting rid of quarterly guidance does not get rid of analysts creating benchmarks for a company to miss or make. It doesn't prevent share dips of a company when it announces that a new drug trial was not successful or it must close stores. A CEO's job is to brave that impact and the board's role is to give a CEO leeway. The best a company can do is to prepare the market for the reality. The ability to do so is particularly important in industries like food & retail, which are in the process of reshaping their portfolios and business models in the glare of the public eye. Those efforts are costly & not always predictable.
Forecasting quarterly earnings isn't the issue, it's CEOs
Pres Trump's meeting with Japanese president Shinzo Abe was billed as a conversation about upcoming peace talks with North Korea. But with steep tariffs on imports of Japanese steel & aluminum & threats of levies on Japanese cars, the topic of tense trade relations between the 2 countries was the elephant in the Oval Office. The meeting with Abe comes as Trump prepares for a gathering in Quebec tomorrow of the heads of state of the world's 7 largest economies, including Canada, the US, Japan, Britain, Italy, France & Germany. Officials from the EU also attend.
Abe faces pressure to join trade war against the U.S.
Fast-rising home prices may be a roadblock for buyers, but they are putting some homeowners on Easy Street. As home prices rise, so does the percentage of home equity for those owners with a mortgage. Home equity jumped 13.3% in Q1 compared from a year earlier, according to CoreLogic. For the average borrower, that translates to $16K in additional home equity gained during the year, or a collective $1T, the biggest gain in 4 years. Despite the big value gains in the past few years, 2.5M borrowers (4.7% of all homeowners with a mortgage) are still underwater on their home loans, meaning they owe more than the homes are currently worth. However, in Q1, 84K borrowers came up from underwater, regaining equity. The negative equity rate fell 21% from a year earlier, when just over 3M borrowers were underwater. Negative equity peaked in 2009 at 26% of all mortgaged properties. "Home-price growth has accelerated in recent months, helping to build home-equity wealth and lift underwater homeowners back into positive equity, the primary driver of home equity wealth creation," said Frank Nothaft, CoreLogic's chief economist. "The CoreLogic Home Price Index grew 6.7 percent during the year ending March 2018, the largest 12-month increase in four years." As with everything in real estate, the gains vary depending on location. Homeowners in Washington state, where prices are soaring, gained an average $44K in home equity, while Californians gained an average $51K. In the far Western states, equity gains are fueled by a long run in home price escalation. With strong economic growth & higher purchase demand, we expect these trends to continue for the foreseeable future," Nothaft added. Gains in home equity are likely fueling the boom in home remodeling. They are not, however, pushing homeowners to list their homes for sale, because trading up is so expensive and the supply of homes for sale is so lean. Those still in a negative equity position are also stuck in place because they would have to spend money to get out of their mortgages. They, too, are adding to the supply crisis. Ironically, homeowners gaining equity and homeowners with negative equity are part of the reason home prices are rising so quickly. Supply is so lean & demand is so strong that new listings are moving very quickly & the majority are selling above list price. Bidding wars are fast becoming the norm.
US homeowners gained $1 trillion in the last year as their housing values jumped
This was another mixed days for stocks, ahead of the big G-7 meeting at which very little is expected to be decided. There was profit taking in the big tech stocks. Given their recent run, selling was in order. Meanwhile the Dow is hanging in above 25K, something the bulls like to see. Unsettled conditions for trade negotiations will continue.
Dow Jones Industrials
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